Analysts unpack African mining sector challenges, propose solutions

JOHANNESBURG (miningweekly.com) – The African continent remains “a treasure trove” of metals and minerals, possessing some of the last unexplored mineral tenements on earth.

Sluggish global commodities prices have taken their toll on investment in exploration and mine development in recent years, as global sources of capital have been constrained.

“On top of this, mine developers and the providers of capital both are facing a ‘regulatory tsunami’ imposed by traditional investee countries, combined with frequently uncertain internal regulatory regimes,” highlighted panellists in a webcast on Thursday.

Looking ahead to the 2017 edition of the Investing in African Mining Indaba, which will take place between February 6 and 9, in Cape Town, the webcast was facilitated by Mining Indaba content director Harry Chapman with the panel comprising banking group Nedbank Capital mining and metals head Paul Miller, advisory firm Deloitte & Touche emerging markets and Africa MD Dr Martyn Davies and law firm Herbert Smith Freehills partner and Africa chair Peter Leon.

Miller highlighted that the increased focus worldwide on ensuring minerals were sourced from conflict free zones and that they could be traced throughout the value change, while inherently positive, could be viewed as inhibiting for some investors and mining companies.

He added that there were also concerns from miners and investors about significant changes being implemented in some African countries' mining codes that sought to increase mineral rents and mining taxes.

Leon concurred with Miller and stated that the attractiveness of some African countries as mining investment destinations had declined with the notable exceptions of Botswana and Ghana.

He added that there was also a concern by international mining houses based in “Western jurisdictions” that they were held to higher standards than their Chinese and Indian counterparts.

Davies explained that Chinese companies were unlikely to adopt global benchmark standards in their operations until such time as these were adopted by the Chinese government.

He, however, stressed that Africa’s most critical challenge lay in the area of accountability and transparency, which was “virtually impossible” in many countries owing to them not being democracies.

“Bold, progressively minded leadership is what is truly required for Africa to unlock its full potential in the mineral resources sphere. Until this happens, many African countries will continue to lose out,” Davies lamented.